MaterialRvwS5 - Section 5 Review of Material Net Sales =...

Section 5 Review of MaterialNet Sales = Sales Revenue – Sales Discounts - Returns and Allowances - Credit Card DiscountsContra-revenue accountsoCredit Card Discounts – debited when incurred; amount in the receivable account (also debited) is the difference between the Sales Revenue amount and the credit card discountoSales Discounts - recorded when the payment is received within the discount periodoSales Returns and Allowances – debited when items are returned; Accounts Receivable decrease (credit)Accounting for bad debtsoMost businesses create a contra-asset account called “Allowance for Bad Debt” with a credit balance for payments they do not expect to receiveoWhen they are certain these payments will never come, they decrease the Allowance for Bad Debt (debit) and the Accounts Receivable (credit) accounts How do companies estimate the amount that should be in their Allowance for Bad Debt account?

This
preview
has intentionally blurred sections.
Sign up to view the full version.